Monday, January 29, 2018

Herbalife's first post-FTC disclosure still uses funny math to manipulate impressions

Herbalife settled with the FTC in 2016 in exchange for FTC not calling the company a pyramid scheme outright. The settlement included a long series of accommodations and required disclosures, and the first of which was just published, and it included some interesting statistics.  The document is called "Statement of Average Gross Compensation" for 2016, and here's a link to it from myHerbalife.com

It's parsing the numbers that make things interesting and reveals what's between the lines (and behind the numbers).

Note the following tidbits:

"In 2016... 86% of US Distributors (466926) did not receive earnings from Herbalife"

If you do some math, that says 14% of distributors, or about 76000, did receive earnings in 2016.

"In a typical month from June to September 2017, about 45000 US distributors order products for resale from Herbalife and about 40000 of them earned money from their sales and the sales of those they sponsored."

This disclosure statement contrasts HEAVILY with what the president of Herbalife, Des Walsh, said during the November 2 3rd quarter earnings call, where he said

"Today, we've got about 470000 preferred members. We've got about roughly 215000 distributors." (source)

How did Herbalife go from 215000 distributors in June to September 2017 (3rd quarter) to "45000 distributors (who) ordered products" between June and September? If it were only 10-20% variance, we'd say oops, and let them fudge. But we're talking about a 478% variance (45000 vs 215000). 170000 distributors went missing between the President's statement and FTC-required disclosure.

Clearly, the two are using some VERY VERY different definition of "distributor"

Which really makes you wonder... What ELSE is Herbalife not telling us?

Monday, January 22, 2018

Scam Tactics: Why do HYIPs compound DAILY?

Why do HYIPs compound daily?


The answer is "habit loop"... The HYIPs are there to feed you false information to get you to form a habit... "trust us"

Habit loop has three steps
  • Cue -- the trigger to start the routine
  • Routine -- the behavior
  • Reward -- the reward for performing the routine
A cue triggers the habit, much like the bell causes Pavlov's test dogs to start salivating. 

The actual routine is the behavior triggered by the cue. A physical routine is sometimes called "muscle memory", but a routine can also be emotional or just mental, or combinations. 

The reward is the endorphin rush you get when you've completed the routine, can be physical rewards (like chocolate) as well. A reward can be a simple "whew, glad I survived that" to a little smile when you realized you parallel parked perfectly or anywhere in between.  

The way the brain works is as soon as it spots a cue, the brain automatically executes the routine, without further processing. Think of it as "macros" that is run automatically. The brain doesn't need to calculate every move as long as it saw the cue. And the reward for finishing the routine is what cements the routine into place, and turn it into a habit. 

So what does all this have to do with HYIP, i.e. micro-ponzis? 

The HYIP operators are out there to make it your habit. You are prompted and was rewarded for doing so. And to accelerate your habit formation, the ponzis compound daily. Once it became a part of your habit, it makes you resistant to any suggestion that you're involved in a fraud. 

Tuesday, January 16, 2018

News: BehindMLM is under Denial of Service Attack for several days now

BehindMLM is under Denial of Service Attack, where bad actors, controlling a swarm of hacked PC's, flood the server with traffic it cannot handle. The result is the website becomes unavailable.

No one has claimed responsibility, but then BehindMLM has made many enemies when it exposes new suspect scams almost daily, both online and offline. And it wasn't the first time the BehindMLM had been knocked offline. This time, not even Project Shield by Google, which is supposed to handle DDOS attacks, was able to handle the traffic at this time.

BehindMLM's last expose revealed that USI-Tech, had been declared illegal by several US and Canadian jurisdictions, has apparently stopped withdrawals. This has not been confirmed when the website went offline.

It's also reported that OneCoin is pretty much in stasis, with many of the prominent "leaders", many of whom had fought bitterly online with critics, have moved on to other kleptocoins.

MLMSkeptic will keep you updated on such news as available.

Wednesday, January 3, 2018

MLM Basics: Why MLM (almost) never have a price advantage

Ever notice that the products in MLM cost way more than equivalent products elsewhere?

doTerra essential oil... Intro kit is $27 for 15 mL of oil.


However, Amazon sells 10X the oil for slightly lower price, from a different vendor


Remember, 15 mL vs 160 mL of oil. doTerra is more than 10X more expensive. 

You can guess the doTerra reps will start yapping about how their stuff is Certified Therapeutic Grade Pure and nobody else compares. Actually, it's a term invented by doTerra themselves, and they certify themselves, it doesn't mean anything!

How about juices, you say?

Wednesday, December 20, 2017

Unspirational Quote: It is not the mountain we conquer but ourselves

Recently, it seems some folks want followings by posting popular quotes but framing them to be inspirational toward MLM participants. Here's one example:


However, it seems these folks do NOT actually look into the origin of such a quote.

Tuesday, December 12, 2017

Scam Tactics: How Easy It Is To Fool Experts and Review Sites, or allow them to fool you




Recently, there's an article at Vice.com, where the author decided to play a hoax on TripAdvisor... They created a FAKE restaurant, which is a picnic table in the back of the author's house, created some FAKE entrees (you'll laugh at the ingredients), got some FAKE reviews through burner phones and whatnot, and got it to be the top-rated restaurant in London... a restaurant that does NOT exist.

I won't spoil the method, let's just say, it's easier than you think.

This wasn't the first prank the author, Oobah Butler, had done. Previously he bullsh*tted his way onto Paris Fashion Week and it was absolutely brilliant. But he's hardly the first to prank experts and succeded.

But then, expert reviews are fooled all the time.  In 2008, wine critic and author Robin Goldstein created a fake restaurant, allegedly stocked with the worst wines Wine Spectator magazine had ever rated. The submitted it to the said magazine. After a while, the fake restaurant had won "award of excellence" by the same magazine.

Wine Spectator called it "publicity seeking stunt", but it exposes something deeply troubling... What sort of experts at the magazine review the candidate for "award of excellence"?  And if they let a fake restaurant get on, what can DELIBERATE manipulation do?

But the pattern ran much much deeper than that. Experts are fooled ALL THE TIME.
And the problem doesn't stop there. There are review and authority websites that secretly signs under-the-table deals with crooks to promote or write nice articles without any disclosure. And this had been a long-standing problem in network marketing.


Wednesday, December 6, 2017

DADA Loop: Data / Analysis / Decision / Action and the MLM mind




How do you make decisions?  It's usually a 4 step process:

1. Gather Data

2. Analyze Data

3. Decide on Action

4. Perform the action

This is pretty obvious to most people. Military call it the OODA loop, civilians called it DADA loop (data, analysis, decision, action), but it's the same thing.

So how can this loop go wrong?  EVERY one of the four steps can go wrong.
  • One can gather the WRONG data (victim of deception or bad data gathering)
  • One can fail to analyze data objectively (by ignoring good data)
  • One can fail to decide on any action (stalled loop)
  • One can fail to perform the action correctly.

Let's see how MLMer reacts to these steps.